BARRE — Department heads are still on yellow alert and discretionary spending remains frozen without prior approval, but City Manager Steve Mackenzie says he’s not as concerned as he was a week ago about the prospect of a looming deficit.

It could still happen, but after having the opportunity to thoroughly review a mid-year budget report, Mackenzie said things aren’t nearly as bleak as they appeared when he first glanced at the document’s bottom line.

“You can’t look at the raw numbers and make … an informed judgment as to the status of the budget,” Mackenzie told city councilors a week after warning them that ending the current fiscal year in the black seemed like an extremely remote possibility.

That “gross analysis” was based on a cursory review of a mid-year snapshot of the city’s financial performance — one that suggested expenditures were running over budget to the tune of about $160,000, while revenues were underperforming estimates by several hundred thousand dollars.

Mackenzie said those numbers, while accurate, are “misleading” and his gloomy financial forecast had brightened considerably after he’d had a chance to drill into the numbers.

“The good news is it looks like we’re OK right now,” said Mackenzie, who is now projecting a $12,000 surplus that is barely worth mentioning in a city that is slated to spend $10.3 million this year.